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REVIEW SUMMARY

Friends Provident International Reserve Investment Bond

Friends Provident International has over 40 years of experience in the international life assurance market. They provide savings, investment and protection solutions to customers in Asia and the UAE and have offices in Dubai, Hong Kong, UK, Singapore and the Isle of Man.

Friends Provident International Limited (FPIL) is now owned by International Financial Group Limited (IFGL).

IFGL provides investment, savings and protection solutions to international investors around the world and the group comprises of RL360, RL360 Services, Ardan International and Friends Provident International.

The IFGL group employs 650 staff and administers assets of US$24 billion for 210,000 customers.

Overview
FAQ
Customer Reviews
Expert Verdict

Reserve is an international investment plan that Friends Provident International claims is suitable for customers with a lump sum to invest for a minimum of five years, who seek capital growth or regular withdrawals, or a combination of both.

Reserve is available to those who are aged 18 and over. If the plan has lives assured, the minimum age is 2 years old and at least one life assured must be
80 or younger.

The Reserve Investment Bond requires you to invest a lump-sum payment of at least GBP 50,000. This needs to be invested for at least 5 years or an early cash-in charge may apply.

The Reserve Bond has two plan options:

  1. Whole of life and
  2. Capital redemption.

Features of Reserve Investment Bond:

  • In FPI's Reserve, the whole of life version includes an element of life cover, whereas the capital redemption version provides a guaranteed maturity value.
  • It gives you access to investment markets through unit trusts, investment trusts and open-ended investment companies. The personalised assets version could also include international equities, fixed interest securities, structured notes and deposits.
  • Reserve can provide you with regular withdrawals, although please note this will reduce your capital value. If the capital redemption version has been chosen, withdrawals will also reduce the guaranteed maturity value.
  • Currencies available include:

    – UK pounds sterling (GBP)
    – US dollars (USD)
    – Euro (EUR)
    – HK dollars (HKD)
    – Australian dollars (AUD)
    – Japanese yen (JPY)
    – Swedish krona (SEK)
    – Swiss francs (CHF)

  • You can make additional lump-sum payments into your plan at any time. The minimum additional payment is GBP 5,000 or GBP 10,000 for the annual policy charge option.
  • If the whole of life version is chosen, you can set up the plan on your own life, on another person’s life, or on up to ten lives.

The establishment charges of Friends Provident International's Reserve Investment Bond would depend on whether you have appointed a DFM (Discretionary Fund Manager) or not. Let's have a look at what it would be without a DFM:

Currency No discretionary fund manager appointed Annual policy charge option
Whole of life Capital redemption
GBP  50,000  100,000 100,000
USD  75,000  150,000 150,000
EUR 75,000  150,000 150,000
HKD  600,000  1,200,000 1,200,000
AUD  150,000  300,000 300,000
JPY  10,000,000  20,000,000 20,000,000
SEK  650,000  1,300,000 1,300,000
CHF  125,000  250,000 250,000


If you later wish to add to your plan, the minimum additional payment is as follows:

Currency Establishment charge option Annual policy charge option
GBP 5,000  10,000
USD  7,500  15,000
EUR 7,500  15,000
HKD  60,000  120,000
AUD  15,000  30,000
JPY  1,000,000  2,000,000
SEK  65,000  130,000
CHF  12,500  25,000

 

Friends Provident International's Reserve also has two investment options, namely:

  1. Collective investments and
  2. Personalised assets.

1. Collective investments: 

Under collective investments, you can invest your money in the following:

  • UK authorised unit trusts 
  • UK investment trusts, excluding warrants
  • Open-ended investment companies
  • An interest in an overseas collective investment scheme that is structured as one of the following:
    – an open-ended investment company
    – a unit trust
    – any other arrangement creating co-ownership rights
    – hedge funds and exchange-traded funds
  • Cash, including bank and building society deposits.

2. Personalised assets:

Under this investment option offered by FPI, you can invest your money in:

  • Equities and fixed interest securities (including Sukuks) quoted on most recognised stock exchanges
  • Unit trusts
  • Open-ended investment companies
  • Investment trusts
  • Offshore reporting and non-reporting funds
  • Hedge funds, funds of hedge funds and exchange traded funds
  • Structured notes and structured deposits
  • US, Canadian and Australian mutual funds where your investments are held with a discretionary fund manager
  • Cash, including bank and building society deposits.

You can exchange existing assets into your plan which comply with the structures. The minimum value of an asset to be exchanged into your plan is GBP 5,000 (an asset exchange charge will apply).

NOTE:

We would recommend reading the expert verdict section of this review to understand why our experts gave Friends Provident International's Reserve Investment Bond 3 out of 5 stars in this independent review.

 

 

The Pros

> Popular plan
> Strong brand of parent company

The Cons

> GBP 25,000 is the minimum investment
> Limited flexibility of full withdrawal or full access in the early years without penalty
> Commonly mis-used
> With commission this is an extremely expensive option, and even part withdrawals can increase real costs. Costs are largely dictated by the charging structure chosen by an adviser
> Many countries do not recognise any tax concessions
What happens to the plan if I die?

This depends on whether a whole of life plan or a capital redemption plan is selected.

1. Whole of life plan:

  • If you set the plan up on your own life, the plan will end if you die. FPI will pay a lump sum equal to 101% of the cash-in value, or, if lower, the cash-in value plus GBP 10,000, on your death.
  • You can set up the plan on up to ten lives, so that it continues after the first death.
  • They will pay 101% of the cash-in
    value, or, if lower, the cash-in value plus GBP 10,000, on the death of the last survivor only and the plan will then end.
  • The death benefit is not a guaranteed amount because FPI cannot guarantee the value of your plan. It will depend on the cash-in value at the time of death.


2. Capital redemption plan:

  • As there are no lives assured, the plan continues until it is fully cashed in, or until it matures at the end of the 99-year term.
  • Following your death, the plan may be assigned to the beneficiaries, cashed in by your personal representatives, or by the trustees if the plan is written in trust.
  • If cashed in, the cash-in value of the plan will be paid.
Who is the Reserve Investment Bond suitable for?

According to Friends Provident International, Reserve is an international investment plan suitable for customers with a lump sum to invest for a minimum of five years, who seek capital growth or regular withdrawals, or a combination of both.

Reserve is available to those who are aged 18 and over. If the plan has lives assured, the minimum age is 2 years old and at least one life assured must be 80 or younger.

NOTE: We would recommend reading the expert verdict section of this review before making a decision.

What are the main risks with the Reserve Investment Bond?

Well, apart from the cost...here's what FPI say are the main risks to be aware of: -

What you get back in the future depends on how well the investments perform.

The value of the plan can go up and down. You could get back less than you’ve paid in.

Friends Provident International only guarantee the value if the capital redemption version is chosen and the plan is cashed in at the end of the 99-year fixed term.

When you cash in your plan, you may get back less than your illustration shows. This could happen for several reasons, for example, if:

–  investment returns are lower than shown

–  charges are higher than shown

–  you take out more money than shown.

Some assets carry a higher level of risk than others and may be subject to sudden and large falls in value. This could erode some or all of your capital.

If you or your investment adviser deal excessively and your portfolio value is relatively small, then the value of your Reserve plan may be eroded and the costs may be disproportionately high.

If you invest in an asset denominated in a currency different to the plan currency, the value can go up and down simply because of changes in the currency exchange rate.

Inflation will reduce the spending power of any money you get back in the future.

How do I apply to FPI's Reserve plan?

In order to apply to this plan, you simply need to complete the application form and return it to your financial adviser along with the required documents.


For the required documents, please see the ‘Reserve – application form’.

Payments are only be accepted by:
– telegraphic transfer
– banker’s draft
– cheque
– asset exchange.

What is GTA?

GTA stands for General Transaction Account.

Friends Provident International set up General Transaction Accounts in the currencies you
choose.

These operate as cash accounts and receive any
payments you make to them or they make to you.

Any transactions such as charges to be taken, and the buying and selling of investments, will also pass through these accounts.

The charges can drown your capital

I've seen my lump-sum eroded by charges, fees and commissions...

I was duped by an adviser and know better now!

 

Thank you AES

My Reserve was just a part of my portfolio - I wanted a low risk home for a lump sum. I chose, upon advice, FPI's Reserve.

It was wrapped up in many layers, apparently for tax efficiency and for my retirement - but when I got my entire portfolio reviewed by AES, I found out that I had paid and was continuing to pay for what I thought was the safest part of my portfolio. 

I urge everyone to get a Second Opinion Review done - because I BET you won't know the half of what you've lost until you're shown. Luckily, I wasn't just given the bad news - I was shown how to fix the mess I was in.

Expert assessment of Friends Provident International's Reserve Investment Bond

Like many other offshore investment bonds, we have seen (all too often) the FPI Reserve Bond being used or sold to investors within QROPS and SIPPs.

This is done in order to generate more commission for the salesperson.

The FPI Reserve Bond should not be used within a QROPS or SIPP, because when you start to draw on your pension, the charges may still apply on the original investment, which effectively means your charges will go up as the capital decreases - and will erode some of the remaining capital at a quicker rate.

In short, used in the right circumstances, offshore bonds can provide attractive tax benefits (but definitely not within SIPP or QROPS).

However, in many instances, they can be mis-used by commission based salespeople to extract high levels of commission. Our advice is to incept such a plan only after receiving advice from a fully regulated UK- qualified financial planner, and to opt for a cleanly priced option without any form of establishment charge or lock-in period (zero-exit penalties).

If you already have a Reserve Offshore Investment Bond from Friends Provident International, and it is worth £250,000 or more, we strongly recommend you seek a Second Opinion to ensure you are on track to get and keep the life you want.

There's every chance you're paying far too much for an inappropriate product. Learn more from our deep dive into Friends's Provident International's Reserve Investment Bond.

Friends Provident International - Reserve Investment Bond Brochure

Friends Provident International - Reserve Charging Structures

Friends Provident International - Reserve Application Form

Friends Provident International - Reserve Collective Investment - Capital Redemption Key Features

Friends Provident International - Reserve Collective Investment - While of Life Key Features

Friends Provident International - Reserve Personalised Assets – Capital Redemption Key Features

Friends Provident International - Reserve Personalised Assets – Whole of Life Key Features

Friends Provident International - Product Guide

Friends Provident International - Dealing and Settlement Charges Guide

Friends Provident International - Whole of Life Personalised Assets Policy Conditions

Friends Provident International - Whole of Life Collective Investments Policy Conditions

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